The bitcoin price has fallen to its lowest level since December 2021 under pressure from the Federal Reserve (Fed), which announced a faster rate hike than initially expected.
The bitcoin price fell to $42,505 in early Asian trading on Jan. 6.
The volatility in the cryptocurrency market follows last night’s decline in the U.S. stock market after the Fed released minutes from its FOMC meeting stating that the U.S. labor market was very tight. This forced the Fed not only to raise interest rates faster than expected but also to scale down its QE program to curb inflation.
Given economic developments, labor market conditions, and inflation, the Fed is likely to raise short-term interest rates in a short period of time, and sooner than the Fed Committee had previously expected. It will also start shrinking the Fed’s balance sheet after the rate hikes begin.